Business LoansBusiness Line of Credit

Best Business Lines of Credit in 2019

When you need money for your business but don’t want to borrow a large lump sum in the form of a term loan, a business line of credit could be the solution to your problems.

A business line of credit allows you to borrow funds as needed up to a certain limit. Because the line is revolving, once you pay back what you borrow, the full amount becomes available again.

Throughout the life of your business, there will likely be instances when you need cash right away. Establishing a business line of credit would give you access to financing whenever you need it.

The best business lines of credit

  • Kabbage
  • Fundbox
  • BlueVine
  • OnDeck
  • StreetShares

Read on to find out more about our picks for the best business lines of credit available in 2019 and how we selected them.

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What to expect from a business line of credit

A business line of credit would help you cover short-term financial needs, like cash flow shortages, payroll, inventory or everyday operating expenses. You can obtain business lines of credit from banks, credit unions and online alternative lenders.

Eligibility requirements for a business line of credit would depend on the lender you choose, but in general you should be prepared for lenders to look at how long you’ve been in business, your monthly revenue, business credit history, business assets and possibly a guarantor’s credit history.

The state of your business and your personal credit score would determine the interest rate on your line of credit. If both are in good shape, you could receive a favorable rate and repayment terms. But if not, the lender could deem your business a risk and set a higher rate.

Before opening a line of credit, compare lenders to make sure you’re getting the best rate and terms for your business. Also, make sure you understand all rules associated with your line of credit. Some lenders may require you to pay down your balance completely at some point, so you may not want to borrow more than you can pay back.

How is a business line of credit different from a business credit card?

A business line of credit and a business credit card are similar, in that both products allow you to borrow money from a predetermined credit limit — but there are differences in the details.

Business credit cards tend to come with higher interest rates than lines of credit. Plus, business credit cards often have fees and penalties whereas lines of credit do not, though some business lines of credit charge a maintenance fee.

Depending on which card you choose, a business credit card could come with added perks like rewards or cash back. But business credit cards typically have stricter repayment schedules than lines of credit.

Whichever product you decide to use, you would have access to financing on an as-needed basis as soon as you’re approved for credit.

Best business lines of credit in 2019

For purposes of this story, we selected business lines of credit up to $250,000. Though brick-and-mortar banks offer business lines of credit, we focused on online lenders, which typically have more lenient requirements (though perhaps higher rates). To make this list, online lenders also had to show:

  • Transparency. Information on rates, terms and fees should be clearly described on lender websites.
  • Reputation. Lender credibility was a factor in our determination.
  • Accessibility. We heavily weighted lenders that either did not have minimum credit score requirements or offered other paths to entry.

Kabbage

Kabbage is an online lending company that provides lines of credit up to $250,000 for qualifying businesses. Borrowers can pay back their debt over 6 or 18 months. Business owners can apply online or through the Kabbage mobile app. You can use Kabbage funding to cover a range of working capital needs, from inventory and equipment to payroll and hiring costs.

To qualify, business owners need at least one year in business and a minimum of $50,000 in annual revenue or $4,200 in monthly revenue in the last three months. Kabbage charges a monthly fee between 1.50% - 10.00% of your principal each month you hold a balance. Every month, you would be required to pay back either one-sixth or one-twelfth of the amount you borrowed.

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Fundbox

FundBox is another online lender offering lines of credit for eligible businesses. Approved borrowers can receive a line of credit up to $500,000. Fundbox does not charge any application or origination fees, but you would be required to pay about 0.7% of the money you withdraw on a weekly basis over 12 or 60 weeks. However, you could pay back your debt early to save on fees.

There is no minimum credit score or monthly income requirement to be eligible for a Fundbox line of credit, and the lender asks for just six month in business. If approved, you could receive funding as soon as the next business day.

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BlueVine

BlueVine offers business lines of credit up to $250,000 with interest rates starting at 4.8% for qualifying businesses. You would only pay for what you borrow, and repayments are due weekly or monthly up to 6 months.

Business owners need a FICO score of at least 600, six or more months in business and at least $100,000 in annual revenue to be eligible for BlueVine credit. You would also need to submit basic details about you and your business when applying online, as well as 3 months’ worth of bank statements or a connection to your bank account.

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By clicking “See Offers”, you may or may not be matched with any lender mentioned in this article. Based on your creditworthiness, you may be matched with up to five different lenders in our partner network.

OnDeck

OnDeck, another online business lender, provides lines of credit up to $500,000. Interest starts at 9.99% and OnDeck automatically deducts fixed weekly payments from borrowers’ bank accounts. OnDeck also charges a $20 monthly maintenance fee, but it is waived for six months if you withdraw more than $5,000 in the first five days after opening your credit line.

OnDeck requires applicants to have at least one year in business, $100,000 in gross annual revenue and a personal credit score of at least 600. Your credit line amount and rate would depend on OnDeck’s assessment of your business and personal financial history.

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By clicking “See Offers”, you may or may not be matched with any lender mentioned in this article. Based on your creditworthiness, you may be matched with up to five different lenders in our partner network.

StreetShares

StreetShares offers online business financing with a focus on veteran business owners. The Patriot Express line of credit ranges from $5,000 to $250,000 with terms spanning three to 36 months. You would be able to withdraw funds whenever you need and only pay interest on what you use. Interest rates start in the upper single digits for StreetShares’ most qualified borrowers, according to 2018 government filings.

You must be a U.S. resident with at least one year in business to qualify. StreetShares will also ask for six of your most recent business bank statements, your total outstanding debts and possibly federal tax returns and financial statements. StreetShares would deduct fixed weekly payments from your business bank account as you pay down your debt.

The bottom line

A revolving line of credit can be a smart financing option for your small business. You would have access to funds whenever you need a boost, and you would only have to pay back what you borrow. Once the debt is paid off, your full credit limit would become available again.

When choosing a lender, pay close attention to interest rates and terms that would apply to your line of credit. You don’t want to end up with high payments you can’t afford. Also, check out the maximum credit limit the lender offers. The amount of money you need would affect which lender you choose.

Keep in mind that most online lenders automatically deduct payments from your bank account. While it would help you avoid missing due dates, you’ll also have to make sure the deductions don’t disrupt your cash flow. If you find a lender with reasonable interest rates and stay on top of your payments, then a line of credit may be an ideal way for you to meet your business’ financial needs.

 

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